Tuesday, October 30, 2007

Terror charges loom for accused (it’s a small world after all)

Alt Tv/Fleet FM Breakfast News CommentTerror charges loom for accused (it’s a small world after all) Police have moved a step closer to bringing terrorism charges against 17 people rounded up in police raids. In an unprecedented move, police have referred evidence to Solicitor-General David Collins for consideration under the Terrorism Suppression Act, after a year-long investigation into alleged weapons-training camps. A decision on whether terrorism charges will be laid is expected within two weeks. Though police would not comment, lawyers for the 17 people arrested two weeks ago in Auckland, the Bay of Plenty, Palmerston North, Whakatane, Ruatoki and Wellington condemned the move. Their voices of protest were joined by activists around the country. And in a ‘it’s a small world after all’ moment, we couldn’t work out where one of our staff members were for a week, until it turned out that he was one of those arrested! Rongomai Bailey is a great guy, a smart guy and a very good cameraman, and after hearing what he had to say, in my mind it seems very clear that there will be two types of Urewera 17, those who went of to what they thought was a camp, but were weirded out by what they saw and left, and those who were planning something.

Speaking Truth to Power: Public Intellectuals Rethink New ZealandEdited by Laurence Simmons

Eggheads . . . the chattering classes . . . the ivory tower . . .

Speaking Truth to Power takes a contentious subject: intellectual life in today’s New Zealand. It is centred on eleven interviews with leading intellectuals including Jane Kelsey, Brian Easton, Nicky Hager, James Belich, Marilyn Waring and the late Michael King and is introduced by editor Laurence Simmons and three reflective essays by Roger Horrocks, Andrew Sharp - on the late Bruce Jesson - and Stephen Turner.

However much ideas and thinking are the subject of public scorn in a land of pragmatists and pioneers, these thinkers, writers, talkers and teachers have a huge impact on the sort of country we live in and the way we treat each other. In their commitment to understanding and improving the social world they have faced hostility, incomprehension and rejection but their lives are rich, complex and dramatic, as this book shows. Speaking Truth to Power may annoy, excite, inspire and anger but it will also open up debate and invigorate discussion; it offers a vivid picture of how important our intellectuals are and how much we owe them.

Speaking Truth to Power is illustrated with original works created by artist John Reynolds.

From the IntroductionThe aim of this book is to take some time to think about thinking itself. In the interviews included here it will be apparent that one thing public intellectuals love talking about is the role of the public intellectual. Bruce Jesson once somewhat scurrilously wrote a foreword to a book on the university in New Zealand entitled ‘The Role of the Intellectual is to Defend the Role of the Intellectual’. In that essay he was forced to declare ruefully that ‘I suspect that most academics would now hesitate to call themselves "intellectuals"’. Those of us working within universities urgently need to change that (mis)perception.

Speaking Truth to Power is not, I hope, limited to short-term objectives or issues, nor does it aim to fall (not too often at least) into the mode of memorialisation, but rather to embrace a democratic vision of what constitutes knowledge, what forms may express it and what subjects may hold it. It is not only a critical reading of the importance of public intellectual debate but also an active engagement in New Zealand’s cultural and socio-political transformation in the last two decades. The writers, experts, activists and thinkers interviewed here are tussling with ideas that are quintessential imperatives for this period of change:

· What does it mean to be an intellectual in New Zealand in the twenty-first century?

· What drives certain New Zealanders to be public in their thinking?

· What of the alleged anti-intellectualism in this country?

· What duties to the New Zealand public does a public intellectual have?

· What might pakeha learn from traditional Maori roles for the intellectual?

· What is at stake in producing a knowledge society?

· Are there any ideas intellectuals should not examine?

· Are academics now so specialized that they cannot act as public intellectuals addressing a broader audience?

· How will ‘critical thinking’ keep its edge if the demand for consensus prevails?

· Why is it that New Zealanders don’t like to be called ‘intellectuals’?

· Do most of our original thinkers really get a chance to influence public life?

· Does the dissenting intellectual have a future?

Speaking Truth to Power is based on the premise that it is crucial for those of us who value ideas to assess rigorously and honestly the state of contemporary ideas, the role of intellectuals and the audience(s) for their ideas. These questions as well as the anxieties, hopes and projections discussed and debated in this book are about our culture - where it happens, who makes it happen - about who has the power, and can be empowered, to understand that culture and bring about change.

Table of Contents

Introduction: Why I am not a Public Intellectual (Laurence Simmons)

Part One Essays: On Being A Public Intellectual

1. A Short History of ‘the New Zealand Intellectual’ by Roger Horrocks

2. Bruce Jesson (1944-99): Exemplary Intellectual by Andrew Sharp

3. The Public Intellectual is a Dog by Stephen Turner

Part Two Interviews: Public Intellectuals Speak Out

4. Brian Easton

5. Lloyd Geering

6. Jane Kelsey

7. Marilyn Waring

8. Michael King

9. James Belich

10. Ian Wedde

11. Ranginui Walker

12. Sandra Coney

13. Nicky Hager

14. Roundtable Discussions

About the EditorLaurence Simmons, MA, PhD (Well), is Associate Professor in the Department of Film, Television and Media Studies at The University of Auckland, New Zealand. He has published in the fields of poststructuralist theory (in particular the work of Jacques Derrida), psychoanalytical theory (Jacques Lacan), New Zealand film and television, and post-war Italian cinema. His most recent books are The Image Always has the Last Word: On Contemporary New Zealand Painting and Photography (2002) and Freud’s Italian Journey (2006). He has also co-edited three volumes on Jacques Derrida, Jean Baudrillard and Slavoj Žižek. In 2002 he was awarded a Senior Fulbright Scholarship and was a Visiting Resident Scholar, Interdisciplinary Humanities Center, at the University of California Santa Barbara and a Visiting Fellow at the Humanities Institute, SUNY Stony Brook. In 2006, he was a Visiting Fellow at Cambridge University’s Centre for Research in the Arts, Social Sciences, and a Humanities and Visiting Fellow at the Humanities Research Centre of ANU, Canberra.

About the AuthorsProfessor Emeritus Roger Horrocks MNZM retired in 2004 as the Head of Department of the Centre for Film, Television and Media Studies, which he was instrumental in having established as a separate department at the University of Auckland in 2000. He was appointed the University’s first professor of Film, Television and Media Studies in 2001 (he had taught lectured at the University from 1967). For many years he has been actively involved in New Zealand’s growing film and television industries in other ways and has been a significant influence on public policy through his work for the NZ Film Commission, Creative New Zealand and as Deputy Chairperson of New Zealand’s Broadcasting Commission (NZ on Air). He has also been involved with film festivals, film societies and many aspects of media education at secondary and tertiary levels. Professor Horrocks has published widely on film and television, experimental filmmaking and art history, as well as literary criticism, particularly on New Zealand and American poetry. His most recent book, Len Lye: A Biography (Auckland University Press, 2001) was a finalist in the Montana New Zealand Book Awards. He was experimental artist Len Lye’s assistant during the last months of Lye’s life and is a member of the Len Lye Foundation. In 2000, he assisted with the curation of a major survey of Lye’s films, photography, painting and sculpture at the Centre Pompidou, Paris, and co-edited the accompanying bilingual book. He was created a Member of the New Zealand Order of Merit (MNZM) in 2004 for services to the film and television industries.

Professor Andrew Sharp ONZM has just retired as professor of political studies at the University of Auckland/Professorial Research Associate in Politics at the School of Oriental and African Studies, London. He is an international authority on the history of political argument and political philosophy, particularly in England and New Zealand. He has published widely in those areas in journals and books including The Political Ideas of the English Civil Wars (Longman, 1983), Justice and the Maori (OUP, 1990; 1997), The English Levellers (Cambridge UP, 1998), Histories Power and Loss: Uses of the Past - a New Zealand Commentary (BWB, 2001; with P G McHugh), and Bruce Jesson: To Build a Nation: Collected Writings 1975-99 (Penguin, 2005). Dr Sharp is currently working on Savage Emotions, a study of European ideas about emotions and their application and modification when they encountered ‘savages’ at home and abroad. He was made ONZM for services to political science in 2006.

Dr Stephen Turner is a lecturer in the English Department of the University of Auckland, with particular expertise in critical theory, especially colonial, eighteenth-century literature, New Zealand studies and writing studies. He has published articles on problems of settler colonialism, particularly in relation to the context of Aotearoa New Zealand and has books on the psychology of settlement and on the gothic in New Zealand culture forthcoming. He recently organised an important symposium "One Country Two Laws" based on the issues raised in celebrated filmmaker Barry Barclay’s book Mana Tuturu: Maori Treasures and Intellectual Property Rights (Auckland University Press, 2005).

The Labour RadicalsThe fourth Labour government won the 1984 election amidst financial and constitutional crises. More than $1 billion had left the country during the campaign as speculators bet on a post-election devaluation. This outflow exhausted foreign currency reserves. The outgoing Prime Minister, Sir Robert Muldoon, who retained formal power until the official count was completed twelve days after polling day, refused to act on the incoming government's request to devalue. By the time he backed down the stage was set for rapid economic reform. Labour is a party of reform. Until 1984, however, it was known primarily for its introduction of the welfare state, which it underpinned with heavy protection and detailed regulation of the economy. This made the New Zealand economy arguably the most regimented outside the communist bloc. To this traditional stance Labour had in the 1970s added a moralistic foreign policy that included a ban on nuclear weapons and weapon-carrying craft and a ban on sport with apartheid South Africa. The party also had a deserved reputation as a champion of women's political advancement both in awarding candidacies (and, at the 1984 conference, the presidency) to women and in developing policies supportive of feminist aims. These values were adhered to in office from 1984 to 1990. As a result, spending on social services increased greatly, foreign policy was recast, liberal legislation was passed on moral matters, and Maori land claims and a number of institutional and legislative changes were made to advance women. Behind the scenes, however, the shadow finance minister, Roger Douglas, together with officials from Treasury and the Reserve Bank, had been preparing an agenda for deprotection and deregulation of the economy. This agenda was only partly reflected in the party’s economic policy. In speed and extent the economic liberalisation was unmatched internationally and it made the New Zealand economy among the freest in the world. But it betrayed Labour's supporters' expectations, caused part of its membership to leave to form the NewLabour party in 1989, and split the government. In 1996, six years after a disastrous electoral defeat, the party was still suffering the after-effects.

Economic Liberalisation By 1984 international conditions had changed. Technological change had cheapened travel and the movement of information (including television) and weakened barriers to the movement of money and capital. Moreover, the international economy was rapidly globalising. Migration flows were high. Countries which stayed outside this internationalised economy experienced constraints on economic growth as capital went to countries where it could get the best return. New Zealand was not among those countries. Behind its regulatory walls the New Zealand economy had become distorted. The main export industries needed subsidies to remain profitable; hence there were chronic balance of payments deficits and rising overseas debt. Demand for government social services and transfer payments had outstripped ability to pay; hence there were chronic budget deficits and rising government debt. The option of more or different regulation after Muldoon's failed wage-price-rent-interest freeze in 1982 was dismissed by the incoming ministers as impractical. In their view there was no alternative to economic liberalisation. In any case, the key incoming ministers were predisposed to deregulate. They were reform-minded, risk-welcoming liberals, middle-class products of a secure upbringing and for the most part veterans of political activism in their young adult years in the liberal and experimental period of the late 1960s and early 1970s. Though their origins were mostly working class or modest-income families, their attitudes and lifestyles increasingly diverged from those origins. They were an educated elite, used to a sophisticated lifestyle quite unlike that of the bulk of Labour’s wage-worker support. For the most part these technocratic liberals saw the economy as a technical problem, the technical solution to which would enable them to carry through the 'real' agenda: improved social services, a more equitable society and a more independent foreign policy. Three major objectives underlay the economic policy reforms between 1984 and 1990. One was to return the budget to balance and reduce government debt. This had many ingredients. On the revenue side a complicated wholesale sales tax was replaced by an efficient, value-added tax, the goods and services tax, first at 10 per cent and then, from 1989, at 12.5 per cent. This also allowed personal income tax rates to be cut, the top rate coming down by half from 66 to 33 per cent. Company tax was cut from 45 to 33 per cent. Concessions and loopholes were progressively eliminated with the aim of a broad-based, relatively low-rate tax regime. Government spending controls followed five approaches. One was to divest the government of businesses it owned or partly owned: Air New Zealand, the Post Office Savings Bank, the Telecommunications Corporation, the Petroleum Corporation, New Zealand Steel and a number of minor enterprises were sold off. Sales by 1990 totalled $8.3 billion. A second approach involved commercialisation. Departments or parts of departments that were considered close to being trading departments, but for some reason could not be sold off, were 'corporatised' - that is, they were turned into companies, or state-owned enterprises, under boards of successful private sector businesspeople and told to act as if they were private sector companies, with commercial objectives. Among these were the Electricity Department, the State Coal Mines, much of the Ministry of Works and the Post Office. All went from loss to profit (though to achieve its profit the Post Office closed 600 post offices in 1988, provoking a widespread angry public outcry). Real prices of their services fell, in some cases dramatically, as productivity climbed. Parts of other departments were hived off into small commercial entities or required to earn some of their income from sales of their services. A third approach was to charge businesses the full cost of government services and to charge users of some social services part of the cost, most notably for drug prescriptions ($5 for adults) and places in tertiary education institutions ($1,250 a student a year). Total charges went from $0.3 billion to $1.3 billion between 1984/85 and 1989/90. Fourthly, the government proceeded to modernise departments' accounting systems. The Public Finance Act 1989 required departments to adopt accrual accounting techniques to give them better control over their finances and shifted the focus from voting money for departments to buy 'inputs' - workers, accommodation and goods and services - to purchasing specified 'outputs' from the departments. Departmental managers were given much more freedom, at national, regional and local levels, to decide what inputs they needed, including staff. The fifth spending control approach was to introduce private sector management techniques into the core state sector. Under the State Sector Act 1988 managers were put on contract. Much of the work that had been done within departments was contracted out to private sector firms or consultants. The different functions - policy advice, regulation, monitoring and service delivery - were separated within departments or in some cases spun off into separate operations. Departments were also expected to stay at arm's length from industries and businesses they dealt with; this contrasted with a tendency before 1984 for departments such as the Department of Trade and Industry and the Ministry of Agriculture and Fisheries to regard themselves as representing their sectors' interests within the government machine. Lobbyists found they had to argue national interest, not their own interest as before 1984, even to get a hearing, let alone a positive result. A second objective of the economic policy reforms was to encourage the private sector to invest in activities that would produce the highest return. Solutions included: freeing up the financial and foreign exchange markets; removing subsidies, internal regulations on business, and compulsory arbitration in wage-setting; lowering protective barriers by removing import licensing; and simplifying tariff and taxation regulations. Inflation was considered a major discouragement to business investment. In a series of steps from 1985 the Reserve Bank took over control of inflation. The Reserve Bank Act 1990 embedded this by mandating the Reserve Bank to pursue 'the stability of the currency' and no other objective. This was defined in a contract between the bank's governor and the Minister of Finance as from 0-2 per cent 'underlying' inflation, that is, consumer price inflation with interest rates, significant movements in government charges and significant 'shocks' such as oil price rises removed. A third objective was to improve consumer choice. Tariffs were abolished on consumer goods not made in New Zealand and lowered on others. The importing of second-hand cars was permitted. Shop trading hours were greatly relaxed. Greater consumer choice was believed likely to encourage greater efficiency. This vast and sudden programme of reform sent the economy on a roller-coaster ride. The freeing of financial and foreign exchange markets encouraged wild speculation and a frenzy of takeovers, followed by spectacular collapses (including of the mainly government-owned Bank of New Zealand, the country's biggest bank), the loss of control of many companies to overseas buyers, some for a song, and then a sharp retrenchment in bank lending and productive investment. Inflation and interest rates soared initially, carrying the currency with them and putting exporters under pressure and blowing out the balance of payments deficit. All gradually fell in the government's second term. Inflation averaged 13 per cent (net of the GST impact in 1986) in the first term but 5.5 per cent (net of the 1989 GST impact) in the second term. The budget deficit was pegged back to 2 per cent of GDP by 1989 to 1990. Government debt, however, rose sharply, partly because $7.3 billion of off-budget losses on, for example, the early 1980s 'think big' projects, were brought on budget. Government debt went up 8 per cent more than inflation between 1984-85 and 1989-90. By 1990 improvements in private sector efficiency were beginning to show, as a number of reports indicated. On a crude measurement (inflation-adjusted sales against hours worked) labour productivity rose 18 per cent in manufacturing in the three years from 1986 to 1989, though total output fell in those years. Agriculture production also fell in the government's first term, though picked up in the second term as prices improved. There were dramatic efficiencies in the corporatised and privatised government businesses which went from near-universal loss-making to profit. But other commentators were unimpressed. For example, Allan Catt of Auckland University, a director of BERL, in April 1990 called the reforms 'a failed and extremely harmful experiment that should eventually be the subject of an official inquiry as to why warnings from informed opinion and an abundance of evidence that the experiment was not working were ignored'. One fallout from the economic restructuring was unemployment (including those on subsidised work and training schemes) which went from 131,000 in January 1984 to 160,000 (10.1 per cent, though 7.5 per cent on the OECD measurement now used) in March 1990. Many of the losses were in corporatised government trading enterprises. This was far below the 1980s 15 per cent peak in Britain and comparable with prosperous Germany's level, but in a country unused to unemployment it was considered severe. Many left the country. Net emigration in the five years to March 1989 totalled 84,300, an average of nearly 17,000 a year. Others turned to crime: violent crime reported to the police was up 70 per cent in 1989 compared with 1980.

Influence of Economic Policy on Social Policy. By one standard the fourth Labour government was in the mould of its predecessors. It dramatically increased social spending (e.g. some 32 per cent more than inflation in education and 10 per cent in health). The Labour government built or bought more than double the number of state houses its predecessor did, doubled the assistance for Maori, and made real increases in benefits. In 1984/85 spending on the 'social wage' was 55 per cent of government spending net of debt servicing; in the budget projection for 1990/91 it was 73 per cent. The government took a number of other initiatives that were in keeping with its past. It appointed a much higher proportion of women and Maori to official bodies, including the country's first Maori and woman Governors-General, Sir Paul Reeves and Dame Catherine Tizard. It established a Ministry of Women's Affairs, funded women's sport and women's refuges more generously and passed 'pay equity' legislation to benchmark pay in women-dominated occupations against pay in similar men-dominated occupations. Help was given with trade union education. However, Labour gained little credit for these initiatives. Pupil-teacher ratios in schools did drop and the number of operations in hospitals rose 15 per cent between 1988 and 1991. But much of the additional spending in health and education went on higher salaries. Moreover, health costs rose faster than inflation as technology made more techniques available; in both health (where hospital waiting lists rose 37 per cent between 1984 and 1990) and in tertiary education (where student numbers went up 59 per cent between 1984 and 1990) demand rose faster than spending. In addition, the liberalisation of the economy reduced individual security by removing the guarantee of a job, a guarantee which was at the heart of the 1930s welfare state. The removal of compulsory wage arbitration in 1985 forced some unions to make concessions in conditions to get wage settlements. And while some people became very rich and the educated elite also did well out of the reforms, incomes for ordinary New Zealanders stagnated or, if they lost their job, dropped: between March 1984 and March 1990 real disposable income of the top quintile went up 6.4 per cent while that of the bottom quintile dropped 0.3 per cent. This was not a traditional Labour picture. Instead of the dignity of independence envisaged by early Labour politicians, the fourth Labour government presided over a big rise in the numbers dependent on the state for their income. The role of the state therefore in one sense - higher spending on social assistance - grew. But in another sense the 1980s marked a dramatic and far-reaching beginning of a retreat of the state. The government owned much less of the economy as a result of the asset sales and intervened much less in what was left - in investment, in regulation, in taxation and in subsidies. Most economic decisions were left to private individuals and firms. In social policy the Labour government ceased to protect jobs (though it did introduce training schemes to help people into jobs) and it targeted its spending more to need, in contrast with the preference of earlier governments for 'universality'. Its part-charges for some social services and its tax clawback of superannuation of the well-off were examples. 'Privatisation', in the sense of pushing responsibility back to private individuals, partially characterised Labour’s social policy agenda. There has been vigorous debate since the beginning of the reforms as to whether the fourth Labour government was driven by theory. Those responsible for devising and implementing the changes, particularly the politicians, generally deny that theory played a significant role. Instead they argue that they were producing practical solutions to practical problems. Sir Geoffrey Palmer in an interview in 1990 said the changes were a return to 'orthodoxy'. Others have seen in the changes the influence of a 'new right' ideological agenda, by which they generally mean a preference for a small role for the state, reliance on markets and private firms and an emphasis on the individual at the expense of the collective. Theory did play a part. The first strand of thinking was that of the 'Chicago school' of Milton Friedman and others, which held that the maximum personal freedom in economic life led to the most efficient outcomes and the highest overall level of economic welfare (more narrowly, Friedman argued that inflation was directly related to money supply and control of the latter would control the former, which was influential in both fiscal and anti-inflation policy). The second influential strand was the 'public choice' theory of James Buchanan and the 'Virginia school', which held that 'providers' (those delivering government services) tended to run the services at least partly for their own ends (that is, their continued employment and higher salaries) and which prompted the division of functions within the state sector and the customer/client focus mentioned below. A number of Treasury officials had studied these theories in the United States on grants and study-leaves and applied them in their analyses and reports to ministers, most notably in their routine post-election briefings in 1984 and 1987. However, this is not to suggest that the politicians and most of the state servants were ideological zealots. Their attraction to the policy lines that developed was based on an assumption that economic liberalisation was the most practical solution to the country’s large economic problems. Nor is it true to say that the Labour government fully embraced free market ideology. For example, though the government demanded managerial efficiencies in hospitals, it rejected a voucher system and competition among public and private hospitals which would have, in effect, privatised the health system.

Foreign Policy and Constitutional ReformOne unshakeable policy Labour brought into office was to ban nuclear-armed and nuclear-powered ships and aircraft. After some hesitation by Prime Minister David Lange, the government implemented that ban in the face of heavy pressure from the United States, which cut off defence ties as a result. Defence policy refocused on the South Pacific. Foreign policy was widened from an obsession with trade to a more political role. This was especially evident in rebuilding links with southern Africa, coupled with the reimposition of a ban on rugby tours by South Africa and the ejection of the South African consul-general. A Bill of Rights was passed which proved effective in blocking legislation inimical to civil rights. The use of cannabis was partly decriminalised and a Labour backbencher, Fran Wilde, successfully piloted a bill decriminalising homosexuality through parliament. Generally the government permitted a generous interpretation of the Official Information Act which has made government policy making far more transparent. But the biggest changes were constitutional. As well as setting up of the Royal Commission into the Electoral System which in 1986 recommended MMP, Labour passed the Bill of Rights Act in 1990. An even more important change concerned the status of the Treaty of Waitangi. The treaty was declared a 'simple nullity' by the Supreme Court in 1877 and thereafter had no legal force. This was changed by a combination of the 1985 Treaty of Waitangi Amendment Act - which gave the Waitangi Tribunal jurisdiction to hear, establish the facts of and recommend redress for claims in respect of injustices back to 1840 - and a series of court decisions which took their cue from that amending act. The net effect was that the treaty regained legal force. It also gained moral force. First the Labour Party then, at its conference in July 1989, the National Party, pronounced the treaty 'the founding document of the nation'. That did not make it the equivalent of a constitution, but the writing into various items of legislation of a requirement to have regard for the 'principles' of the treaty contributed to a profound change of attitude toward it.The initiatives in foreign policy, race relations and the constitution helped hold Labour's support in the 1987 election. But after that the combined impact of economic upheaval, social stress and a sense of betrayal cost the Labour Party dearly. Initial rumbles lay submerged in 1987 election, which produced a higher vote share (up 4 per cent to 48 per cent) and the same 17-seat parliamentary majority as in 1984. But that rise was partly on the votes of many better-off people who would normally have been expected to vote National, but liked the new economic direction. Also, the financial boom masked and delayed the economic contraction that was the inevitable companion to restructuring. When the 1987 financial markets crash stripped away those masks, support for Labour fell away among its core constituency. It was further siphoned off by the NewLabour party, which split from Labour in 1989. Labour also lost support, particularly among its new backers in business and the professions, as a result of cabinet disunity. Early in 1988 Prime Minister David Lange disagreed openly with Douglas over a proposal by the latter for a single-rate 23 per cent income tax, calling instead for a 'cup of tea' - that is, a pause from reform. After a year of often bitter and at times public dispute Douglas resigned in December 1988, only to return to the cabinet in August 1989 on a caucus vote. This precipitated Lange's resignation a few days later. Sir Geoffrey Palmer, who took over from Lange, in turn resigned in September 1990, seven weeks before the election, after pressure by his deputy, Helen Clark, in favour of Mike Moore. Labour's easy win in 1987 was also partly because the National party had still to adjust to the new political environment. In the second half of 1989 it adopted the economic direction and backed the treaty policy begun by Labour. In early 1990 it also adopted Labourís anti-nuclear policy. By proposing more reform in social services and the labour market, National attracted back its 1984 and 1987 deserters and, from them, funding. It looked a credible alternative government. And for those disaffected Labour voters who could not bring themselves to switch to National, NewLabour and the Greens beckoned. At the 1990 election Labour plunged to a mere 35 per cent and 29 seats.

The National postscript 1990-93The National party in government after 1990 acted out of character. Instead of conservatively managing the status quo bequeathed by Labour, it pushed on with reform, extending it into the social services and wages policy. In fact, the first two years of the National government can be seen as an almost seamless continuation of the policy revolution begun by Labour, maintaining the new policy positioning and direction. This belied much of National’s pre-election rhetoric, which was reassuringly mild and vague. It also caused it to break some of its specific election promises. For example, Jim Bolger repeatedly said the superannuation surcharge would be removed in the first budget and belaboured the point with a number of colourful phrases such as ‘read my lips’, ‘no ifs, no buts, no maybes’ and ‘cast-iron guarantee’; instead the surcharge was increased in the 1991 budget. This breach of promise and the adoption in office of a stringent economic, fiscal and social policy line prompted the defection in October 1991 of two backbench MPs, Gilbert Myles and Hamish MacIntyre (son of a former National Deputy Prime Minister from 1981-83, Duncan MacIntyre) to form a Liberal Party. In the same month Winston Peters, the Minister of Maori Affairs, was sacked from the cabinet for repeatedly criticising the policy line; in February 1993 Bolger personally opposed Peters' reselection as candidate for Tauranga and in July Peters formed his own New Zealand First Party after first resigning and winning back the Tauranga seat as an independent. This internal disaffection reflected widespread public dismay at what many, particularly older people counting on the surcharge removal, called a ‘betrayal’. In the 1993 election, National's vote dropped to 35 per cent (from 48 per cent in 1990), exactly and eerily parallelling the collapse in Labour's vote between 1987 and 1990. National had hinted before the 1990 election at the changes to come with a vague promise to 'redesign the welfare state'. As with Labour before the 1984 election the direction was indicated but the intensity with which it would be pursued and the lengths to which it would be taken were not. The social policy approach was initially the work of two young cabinet ministers, Ruth Richardson and Simon Upton. While in opposition from 1988 Upton took up on a part-time basis a Rhodes scholarship he had set aside to enter parliament. Having already become an adherent of Friedrich von Hayek, at Oxford University he studied and approved Buchanan and the need to eliminate moral hazard from social policy, though he saw that best served by maintaining universal provision and lowering its level rather than through tight targeting. Richardson was less intellectual. The daughter of landed parents, she had a strong personal belief that all individuals should and could be self-reliant. Self-reliant individuals would generate a stronger economy and would in any case live more satisfying and rewarding lives. So they must be encouraged, or pushed, out of dependency on welfare and into jobs. Moreover, well-run families ran balanced budgets; so should the government and should achieve that by cutting spending, not raising taxes (which should also be cut), to give maximum space for the private sector to generate wealth and create opportunities for self-reliant individuals. Her approach meshed well with Treasury thinking and budget-cutting imperatives. These sentiments were in tune with traditional, but long-submerged, National values of thrift, family and enterprise. But Richardson's radical mentality was not in tune with a party which valued moderacy and gradualism as important ingredients of conservatism. Richardson's success in persuading Bolger, who was in the moderate, gradualist mould, to radical action lay, as did Douglas's in 1984, in her inheriting a crisis - this time a budgetary one. The Bank of New Zealand had collapsed a second time shortly before the 1990 election, requiring immediate intervention; and the Treasury's post-election briefing papers projected a $5.2 billion deficit by 1993/94 if spending cuts (or tax increases) were not introduced; the country's already low credit rating at the bottom of the AA scale was in jeopardy. A mini-budget on 19 December 1990 cut benefits by an average of 10 per cent and and in all announced $2 billion of spending cuts, which were followed by another $600 million of cuts in the 1991 budget. Spending overall dropped from 42 per cent of GDP in fiscal 1990/91 to 36 per cent in 1993/94. Besides saving money, the benefit cuts were intended to provide an 'incentive' to beneficiaries to find work by widening the gap between unemployment benefit and wages. For three-fifths of those in work, however, wages fell in real terms in 1991/92 as a result of the Employment Contracts Act, passed in the autumn of 1991. These cuts to both government spending and to the spending power of those on wages and low incomes compounded an economic recession already in swing in 1990. Unemployment reached 11.1 per cent in March 1992. The economy contracted 1.8 per cent in calendar 1991. But by 1993 growth in jobs and in the economy as a whole had picked up sharply (GDP was 4.9 per cent and was higher still in calendar 1994 and unemployment was 9.2 per cent in December 1993), partially aided by the spending cuts and labour market deregulation which lowered unit labour costs (through holding wages, allowing more flexible use of labour and allowing substitution of part-time for fulltime jobs), so making companies more internationally competitive. A 10 per cent fall in the exchange rate in 1992 following a fall in interest rates helped export competitiveness. There were four themes in National's approach. One was efficiency in use of resources through the adoption of commercial imperatives and competition or benchmarking (such as the restructuring of the health system). A second theme was to target help to those most in need. So part-user-charges were more widely used. Student fees were retained, though transferred to the universities and then progressively raised by cutting funding. Patients were charged for hospital stays. A new 0.7 per cent tax on all wages and salaries was introduced to pay for part of the accident compensation scheme. 'As a broad principle,' the December 1990 mini-budget stated, 'the top third of all income earners can be expected to meet most of the cost of their social services.' A third theme was to replace in-kind provision of services with cash assistance. In state housing, an accommodation benefit was provided to enable those on low incomes to rent on the open market instead of queuing for a state house; rents for those in state houses were progressively raised to market levels. Through all of these themes ran a fourth: an extension of Labour's 'privatisation'. This aimed to push more decision-making down to the level of the individual or the family and to expand choice for the 'clients' of state services, partly by giving more scope for non-state providers. RHAs could buy hospital services from private suppliers. Bulk funding of teachers’ salaries, delayed by Labour, was introduced on a voluntary basis; though take-up was very slow, partly due to strong opposition by the teacher unions, over time, as bulk funding became more common.National was more true to its reputation as a maintainer of the status-quo in other policy fields. Few of the 1984 to 1990 policy initiatives were reversed or even much modified, even in fields such as the environment, Treaty of Waitangi settlements and anti-nuclearism. The two striking exceptions were the labour laws and the removal, in December 1990, of Labour's 'pay equity' law. In external policy, the National government maintained and developed Labour's independent foreign policy line, though widening the focus to the Asia-Pacific as a whole rather than the South Pacific.

3. Revolution in Retrospect Most economists think the economy was more soundly based, that is, more internationally competitive, in 1994 than in 1984. They point to strong interest from foreign investors in New Zealand company shares and in buying New Zealand companies and/or building their own production facilities in New Zealand. A minority of economists suggest much of the improvement has been related to movements in the exchange rate and that growth rates in the mid-1990s was as high as it was only because the economy was abnormally depressed by the 1990/91 spending cuts. On the other hand, most social commentators point to the food banks, higher crime rates, high suicide rates, the re-emergence of 'poverty' diseases and other indicators of social stress. A minority of social commentators note the more diverse lifestyles, wider range of choice and continuing vibrancy in the arts. About the transformation of the political landscape, however, there is no dispute. The old coalitions that made up Labour and National in 1980s were unrecognisable in the fragmented party map of 1993. As we will see in the next two chapters, one way to read the 1993 referendum is that it provided a facilitative mechanism for the completion of the realignment of the party system which had begun in the early 1980s.